Prospects Daily: Emerging market equities continue to advance

Emerging market stocks continue to advance. Developing-country equities advanced for fourth day as global investors continued to turn to emerging markets. The MSCI Emerging Market Index gained 0.3% this morning, adding to a three day return of 4.3%. Taiwan (China) stocks climbed to the highest level in more than two years as major global brokerage firms (Morgan Stanley, Goldman Sachs, and Nomura) recommended the island’s equities on improving relationship with China and earning prospects. In contrast, Hungary’s BUX index dropped 1.4% after Moody’s Investors Service lowered the country’s credit rating to one notch above junk (‘Baa3’). Meanwhile, the risk premium investor demand to own emerging-market bonds over U.S. Treasuries widened 4 basis points (bps) to 245 bps, according to JPMorgan Chase & Co. EMBI+ index.

Among emerging markets

In Central and Eastern Europe and the CIS, industrial output in Latvia rose 1.2% (m/m) in October according to the statistics office.

In Lithuania, the unemployment rate fell to 13.9% in November from 14.2% in the previous month, translating into a little over 300,000 unemployed persons in the Baltic nation. Unemployment appears to have peaked in July at 15.3%, after the country encountered one of the deepest recessions in the region, due to which GDP contracted by almost 15% for 2009.